LINEAR PROGRAMMING

APPLICATIONS

Rosalie M. Cabagay, MPA

What is LP Applications
Most successful quantitative approach to
decision making, also have been reported
almost every industry. Application includes

 Production Scheduling
 Media Selection
 Financial Planning
 Capital Budgeting
 Transportation
 Distribution System Design
 Staffing
What we’ll Cover

 Marketing Applications
 Financial Applications
 Operations Management Applications
Module Objectives:

 Understand the different applications of linear

programming.
 Set the importance of linear programming in
marketing.
 Comprehend what this linear programming do
with financials and operations management
as well.
What is Marketing

Marketing is
communicating the value
of a product, service or
brand to customers, for
the purpose of
promoting or selling that
product, service, or
brand.
Marketing Applications

 Media Selection
 Marketing Research
Media Selection

Help marketing managers to allocate a fixed

advertising budget to various advertising media.
Media includes

 Newspapers
 Magazines
 Radio
 Television
 Direct Mail
Objective

Objective of Media Selections includes

 Maximize Reach
 Frequency
 Quality of Exposure
Restrictions

 Company Policy
 Contract Requirement s
 Media Availability
Marketing Research

A research to learn about

 Consumer
Characteristics
 Attitudes
 Preferences
Marketing Research Firms

Specialized in marketing research for client

organization. Services they offer includes:

 Designing the Study

 Conducting Market Surveys
 Analyzing the Data Collected
 Providing Summary Reports &
Recommendations
Financial Application

In finance, linear programming can be applied in

problem situations involving:

 Capital Budgeting
 Make-or-Buy Decisions
 Asset Allocation
 Portfolio Selection
 Financial Planning, and many more.
Financial Application Problems

 Portfolio Selection
 Financial Planning
Portfolio Selection

Portfolio selection
problems involve situations
in which a financial
manager must select
specific investments for
example stocks and bonds
from a variety of
investment alternatives.
Objective Function

The objective function for portfolio

selection problems usually is maximization
of expected return or minimization of risk.
Constraints

The constraints usually reflect restrictions on the

type of

 Permissible Investments
 State Laws
 Company Policy
 Maximum Permissible Risk, and so on.
Financial Planning

Financial Planning is an ongoing process to help

you make sensible decisions about money that
can help you achieve your goals in life.
Operation Management
Applications

Managing and directing the physical and/or

technical functions of a firm or organization,
particularly those relating to

 Development
 Production
 Manufacturing
What we’ll cover

 Make-or-Buy Decision
 Production Scheduling
 Workforce Assignment
 Blending Problems
Make-or-Buy Decision

It determine how much of each of several

component parts a company should
manufacture and how much it should purchase
from an outside supplier.
Production Scheduling

Establish an efficient low-cost production

schedule for one or more products over several
time periods (weeks or months)
Advantages

 Can help to smooth the demand signal

 Protects lead time and helps book future
deliveries
 Acts as a single communication tool to the
business
 Helps the Supply chain prioritize requirement
 Helps stabilize production
Disadvantages

 Complexity
 Cost
 Can be Skewed
 Lack of Flexibility
Workforce Assignment

Workforce assignment problems frequently

occur when production managers must make
decisions involving staffing requirements for a
given planning period.
Blending Problems
Blending problems arise whenever a manager
must decide how to blend two or more resources
to produce one or more products.
Activities/Assessments

 Itemized the different applications of linear

programming.
 State the importance of linear programming in
marketing.
 What this linear programming do with
financials and operations management as
well?